Microsoft will not be increasing its bid for Yahoo beyond the $41.7bn offer that is currently on the table, according to Chairman Bill Gates.

He said that Microsoft’s offer was a fair one, and that Yahoo’s board ‘should take a hard look at it’.

Gates also talked about the reasons for wanting to acquire Yahoo, saying that Microsoft needs a larger slice of the market to create a more profitable and competitive search engine to rival Google.

“We can afford to make big investments in the engineering and marketing that needs to get done. We will do that with or without Yahoo, but we also see that we’d get there faster if the great engineering work that Yahoo has done and the great engineers there were part of the common effort.”

Yahoo rejected the offer last week, saying it ‘substantially undervalues’ the company’s assets. The company was rumoured to be talking to News Corp about a deal last week, as well ad discussing a possible ad partnership with Google.

Microsoft’s stock has fallen 13% since it made the offer for its online rival, which has reduced the value from $31 to $29 per share. Yahoo’s share, meanwhile, has risen since in anticipation of an increased offer.